RICHMOND, Va. (AP) — CarMax posted a 15 percent increase in third-quarter profit as improved inventory, financing and more confident consumers drove up sales of used cars.
The Richmond, Va., company, which runs more than 115 stores in 58 markets that mainly sell used cars and trucks, earned $94.7 million, or 41 cents per share, for the period ended Nov. 30, compared with from $82.1 million, or 36 cents per share, a year ago.
The results topped analyst expectations of 39 cents per share. Its shares jumped $2.96, or 8.5 percent, to $37.80 in morning trading on Thursday.
CarMax said its revenue grew 15 percent to $2.6 billion, beating the $2.47 billion in revenue that analysts surveyed by FactSet expected.
Sales at stores open at least one year rose 12 percent during the quarter. This is a closely-watched indicator of a retailer's financial performance as it strips away the impact of recently opened or closed stores.
On a conference call with investors, CEO Tom Folliard said the company benefited from a combination of factors, including more compelling financing offers from its financing arm and third-party lenders, increased selection and strong execution by its store sales teams. Folliard also said he believes consumer sentiment "has come back some."
"The customers that are coming to the store now seem a little bit more engaged than they had been before has shown up in our conversion," he said. "But it's really hard to tell if behavior is shifting back to what we saw pre-recession. I'd say not yet."
Used vehicle unit sales rose 16 percent as the company's average selling price rose less than 1 percent to $19,344. Wholesale vehicle unit sales increased 10 percent during the quarter. New vehicle unit sales, which make up a smaller part of CarMax's business, fell less than 1 percent. Other revenue, which includes fees it receives from third-party lenders its customers use, increased 5 percent.